Momo Inc. (NASDAQ:MOMO) Q2 2019 Earnings Conference Call Transcript

Aug 27, 2019 • 08:00 am ET

Momo Inc. (NASDAQ:MOMO) Q2 2019 Earnings Conference Call Transcript

Yan Tang

a deeper look into the quarter. Firstly, the growth of our community, the core Momo app had 113.5 million monthly actives for the second quarter, up 5% year-on-year, but down by 1% from the previous quarter. Due to the suspension of the user posting and the homepage news feed update since the beginning of May, the number of active users on core Momo saw a downward trend in May and in the first half of June. User posting and the new feeds are basic social infrastructures on the platform. Many users rely on these features to make discoveries of new relationships and build interactions with their connections. Therefore, the suspension of the posting function and the news feed update had caused the user engagement to decrease more than the overall active user count did.

For the month of June, total user time spent decreased by 12% from the month of March. After Momo's posting suspension was lifted on June 21, we undertook a major campaign to call back the users. By mid-August, DAU has gone back to the level that we saw before the inspection period. The gap between the current time spent and the daily average time spent in March has narrowed to low single digit percentage.

[Foreign Speech]

Total paying users for the core Momo platform was 8.6 million in Q2 2019, down by 400,000 from the previous quarter due to the significant decrease in the number of membership subscribers on the core Momo. For those who are not quite familiar with Momo's paid features, there are three different groups of paying users paying for different services on core Momo. The first group are membership subscribers who pay a fixed monthly fee for some premium features. The second and the third groups of paying users are those who pay for virtual gifting and live streaming businesses, respectively.

Since the beginning of 2017, we've shifted the focus of VAS business more towards virtual gifting and thus the membership subscription business has now grown much since then. One of the key premium features offered to paying subscribers hinges upon user posting function which was suspended in May and most part of June. In addition, due to the suspension, we have also seized to run promotions around the membership subscription. These factors have caused a number of subscription members to decreased significantly in the second quarter.

The number of paying users for virtual gifting business and the live streaming business also saw some negative impact from the self-inspection. However, paying users for these two businesses still saw decent sequential growth in the second quarter as the impact from the suspension got largely absorbed by the natural growth momentum of these two businesses.

In summary, the decrease in the paying users in the second quarter solely came from the decline in the paying member accounts, which we view as a non-issue as far as Momo's core fundamentals and future growth prospects are concerned. We have plan to gradually convert these current paying